Delhi Tax Tribunal Rules postgraduate stipend from AMU exempt from income tax
Post-graduate surgery student Lata secured a Delhi ITAT judgment that her Rs 18.34 lakh university stipend is exempt under Section 10(16).
Lata, a full-time MS (General Surgery) student at Aligarh Muslim University, received a stipend of Rs 18.34 lakh that the Income Tax Assessing Officer in Sonipat treated as taxable income. The Commissioner of Appeals affirmed this addition, prompting Lata to challenge the decision before the Income Tax Appellate Tribunal in Delhi, with chartered accountant Anirudh Bharadwaj as counsel. Judicial Member Satbeer Singh Godara examined the nature of the payment, noting that Section 10(16) exempts scholarships intended for educational expenses.
Citing the earlier ITAT Chandigarh ruling in Hiteshi Aggarwal, the tribunal held that the stipend was intrinsically connected to Lata's postgraduate studies and compulsory residency, not a salary for services. Consequently, the tribunal ordered the removal of the tax demand of Rs 18,34,578. Tax experts affirmed that the substance of the payment, not its label, determines taxability.
